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New CGD Study Group Aims to Shed Light on Technological Change and Paths to Development

Ongoing advances in AI, automation, and information and communications technologies (ICTs) may be fundamentally changing traditional paths to development. Academics, policymakers, and researchers in high-income countries have issued numerous reports and recommendations on the implications for jobs, education, and economic opportunities. But far less has been done to assess the effects on the developing world and global comparative advantage. For the small body of work that does already exist, predictions vary considerably.

We are chairing a new CGD Study Group to help fill that data gap. Comprised of development experts, economists, technologists, and business leaders, this group is discussing what automation may mean for traditional paths to development—including manufacturing export-led growth—the potential for new paths (perhaps through improved delivery of services), as well as an assessment of how previous studies have reached widely different conclusions. The goal of the group is not to reach a consensus, but to provide mutually informed viewpoints on what the future might hold for developing countries, as a first step in developing policy responses.

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The group’s first meeting, held on July 16, aimed to assess lessons that could be derived from developed economies, the changing economic environment for developing countries, and regional perspectives of Asia, South America, and Africa.

Per Chatham House rules, we can’t provide individual statements from this fascinating and wide-ranging discussion, however we can report that the Study Group seemed broadly united in pessimism regarding the future of manufacturing-led development, with some skepticism about the model even in the past. De-industrialization in the developed world has been ongoing for decades. Over time, manufacturing has become more capital- and skill- intensive, traits which will make its future in the developing world increasingly uncertain.

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However, optimism remained that as income rises, domestic demand growth in the developing world could ensure some manufacturing employment—and some participants have held out hope for growing opportunities for services exports. And there are new technologies of ICT and automation that are both comparatively inexpensive and can be effectively deployed without high-skill workers to increase output. For example, AI can be used to power applications that may allow less skilled workers to fulfill functions typically performed by a doctor or engineer or to give farmers guidance on which crops to grow. This might form the basis for a growth model based less on exports and more on raising productivity through domestic markets. The gig economy, seen as a step backwards for most workers in rich countries, might be an improvement in countries where the majority work in the informal sector.

With topics ranging from immigration reform through fiscal frameworks and infrastructure development, it became clear that the effects of technologically driven change will be felt differently across and within countries and there will be no one “model’ response.” But we hope the essays, blogs, and podcasts produced by study group members that we share on our page will help map out different potential paths that we will discuss at a closing conference in September 2019. We hope you will join us in the discussion in the coming months by commenting on our work, tweeting at us, and attending our events!

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